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Buyer's Guide - Title Insurance...

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Title Insurance Guide

 

 

CLTA POLICY: (Standard Coverage Policy)


This policy can be used to cover either owners or lenders insurance. It is the standard policy of title insurance in California. Some of the coverages provided are:

1.      All record matters affecting title are shown in the Policy in order of their priority.

2.      There is access if the property abuts upon an open public, dedicated street.

3.      There are no forgeries or failed conveyances in the chain of title.

4.      The insured has a marketable interest in the real property.

 

DOES NOT COVER:

1.      Matters which a correct survey would show.
Unrecorded matters.

2.      Matters which a physical inspection of the property would disclose.

3.      Rights of parties in possession.

4.      Unpatented water and mineral rights.

5.      Matters known, created or assumed by the insured.

 

OWNERS INSURANCE:
Any commercial property, residential property which has more than four units, vacant land, residential real property of less than four units which is not in a tract or normal residential community or which has as its primary use non-residential purposes (farming, grazing and the like).

 

LENDERS INSURANCE:
All types of property normally of Second Deeds of Trust by individuals and non-bank or Savings and Loan lenders.

 

 

ALTA RESIDENTIAL OWNERS POLICY


Used only for residential real property of one to four units (if a residential condominium project, use this policy regardless of the number of units for individual unit sales). This policy, in addition to the basic coverage provided by all title insurance policies protects the insured against losses caused by:

1.      Mechanic Liens arising out of work done on the property to which the insured did or did not agree to pay for.

2.      The encroachment of improvements on the insured's property onto other property.

3.      Taxes and Assessments which are disclosed by public record, but not yet a lien.

4.      Access.

5.      Zoning Compliance (as long as property in question and zoning are both residential).

6.      CC&R's Compliance.

 

Insurer will insure a seller carry back Deed of Trust under this policy by endorsement. This is the only type of Deed of Trust that may be insured under this policy. If Title Insurance is requested to issue this policy for vacant land or real property which is not in a tract or normal residential community, they may decline to issue it.

 

 

                                                            ALTA LENDERS POLICY


For institutional lenders only - Banks, Savings and Loans, Federally Insured Loans, Insurance Companies and the like.

Insures the lender's priority, and the fact that title is marketable covers both recorded matters as well as unrecorded matters such as:

1.      Encroachments.

2.      Unrecorded Easements.

3.      Access.

4.      Loss of Priority.

5.      Unrecorded Liens and Encumbrances.

 

As you can see, the coverage is quite broad. An inspection or a survey may be required.

 

This policy is issued on all types of real property. The rate used is the same as that which you would use for an owners policy (ALTA Residential or CLTA) depending on the type of property being covered.

 

 

ALTA OWNERS POLICY: (Extended Coverage)


Do not confuse this with an ALTA Residential Owners. This is the broadest form of insurance given in California in addition to the coverage given by a CLTA policy. It insures:

1.      Encroachments (not disclosed by the policy).

2.      Access.

3.      Rights of parties in possession.

4.      Unrecorded liens and encumbrances.

5.      Taxes.

6.      Matters which a corrected survey would show.

 

DOES NOT COVER MATTERS KNOWN, CREATED OR ASSUMED BY THE INSURED. As a result, when this type of coverage is requested, additional requirements include:

1.      Correct survey.

2.      Occasionally a field inspection.

3.      A check with all utilities to make sure they have no unrecorded easements.

4.      Copies of all leases and/or tenant lists.

 

Since these requirements take time to complete, plan accordingly. Further, exceptions found in the policy on all matters will be noted, so don't necessarily expect a clean report.

 

While this type of policy can be issued for all types or property, the rules for its issuance never change.

 

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